1 - Introduction to Accounting

Accounting

\- process of recording, classifying, summarizing in a significant manner and in terms of money, transactions, and events which are in part at least, of financial character, and interpreting the results thereof

Bookkeeping

\- process of recording the accounts of transactions of an entity

\- process of keeping records

Accounting

\- covers the whole process of identifying, recording, and communicating information to interested users

\- bookkeeping is under here

Accounting

\- covers the fields of accounting that an accounting graduate can specialize into

Accountancy

\- embraces the accounting profession

Recording

\- writing down of the business transactions in a record book

General Journal

\- record book where business transactions are written down

Classifying

\- process of arranging or organizing transactions in classes of categories

Summarizing

\- summing up of events to find the total so that financial statements can be prepared

Interpreting

\- process where in accounting helps in explaining the meaning and significance of the data in the accounting repors in simplified form

Service Business

\- business tha offer service as their main product

* school, hospital, hotel, consultation, cleaning

Merchandising

\- buys and sells goods without changing their physical form

* supermarket, hardware stores, pharmacies, bookstores

Trading

\- other term for merchandising business

Manufacturing

\- buys raw materials and processes them into final products

\- changes the physical form of the goods it has purchased in a production process

* bakery, restaurant, factories

Single/Sole Proprietorship

\- owned by only one individual

\- most common and simplest form of a business organization

Department of Trade and Industry

\- where single proprietorship is registered

Partnership

\- owned by two or more individuals

\- enter into a contract to carry on the business and divide among themselves

Partners

\- term used to call people in partnerships

Securities and Exchange Commission

\- where partnerships are registered

Corporation

\- owned by five or more people

\- represented by shared of stock. Created by operation of law, thus having a juridical personality

Stockholders

\- term used to describe the people who own a corporation

Securities and Exchange Commission

\- where corporations are registered

Cooperative

\- owned by 15 or more people

\- formed in accordance with the provisions of the Philippine Cooperative Code of 2008

Members

\- term used to call people who own a cooperative

Cooperative Development Authority

\- where cooperatives are registered

Language of Business

\- accounting is called ___ because financial information are communicated to interested users in the form of financial statements

Financial Accounting

\- branch in accounting that focuses on __general purpose financial statements__

Management Accounting

\- branch in accounting involved in the accumulation and communication of information for use by internal users

\- __special purpose financial reports__

Government Accounting

\- branch in accounting that focuses attention on the custody of __public funds__

Auditing

\- branch in accounting involved in the __inspection of entity’s financial statements__ or business processes

\- __expression of an opinion__ (auditor’s report)

Tax Accounting

\- branch in accounting involved in the __preparation of tax returns__ and rendering of tax advice

Cost Accounting

\- branch in accounting involved in the __systematic recording and analysis of the cost__ of materials, labor, etc. to the production of goods

Cost Accounting

\- often in manufacturing firms

Accounting Education

\- branch in accounting that __teaches accounting__ in an organized environment

Accounting Research

\- branch in accounting involved in the __careful analysis of economic events__ and other variables to understand their impact or decisions

\- may be related to one or more of the other accounting branches-

Forensic Accounting

\- branch in accounting that uses accounting skills to investigate __fraud or embezzlement__

Accounting Period

\- length of time that covers the business transactions being reported upon, usually has a period of one year

Calendar Year

\- 12 months, starting on January 1 and ending on December 31

Fiscal Year

\- any succession of 12 months, starting on any month except January and ending on any month except December